Canadian Underwriter

EXOR files securities documents in effort to acquire reinsurer PartnerRe

June 4, 2015   by Canadian Underwriter

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Italian investment firm EXOR S.p.A. announced Wednesday it has filed a “definitive proxy statement” with the American investment regulator in an effort to “communicate directly” with shareholders of reinsurance and commercial insurance provider PartnerRe Ltd.

EXOR S.p.A. has filed a "definitive proxy statement" with the U.S. SEC in relation to its bid to acquire insurer and reinsurer PartnerReEXOR – which effectively controls Fiat-Chrysler Automobile – earlier offered to acquire PartnerRe for about US$6.8 billion, but PartnerRe’s board of directors had already agreed to merge with Axis Capital Holdings Ltd. Both PartnerRe and Axis Capital are traded on the New York Stock Exchange and have scheduled special meetings July 24 in Pembroke Bermuda – where they are based – in order to let shareholders vote on the merger proposal.

EXOR is recommending PartnerRe shareholders vote against merging with Axis Capital.

“Mailing of EXOR’s proxy materials will begin immediately,” EXOR stated Wednesday.

Both Axis Capital and PartnerRe offer reinsurance and various commercial specialty coverages internationally, including in Canada, where both carriers have offices in Toronto.

Related: PartnerRe, Axis Capital shareholders to vote July 24 on proposed merger

Should shareholders approve a merger, it would form a “global top 5 reinsurer,” Axis Capital CEO Albert A. Benchimol stated in a Jan. 25 press release. That was when the firms announced their boards unanimously approved the proposed merger, whereby PartnerRe and Axis Capital shareholders would own 51.6% and 48.4% of the merged firm. Costas Miranthis stepped down as CEO of PartnerRe and as a member of the PartnerRe board and was replaced temporarily by David Zwiener.

On April 14, EXOR announced – in an offer “envisaged to be friendly” – it was interested in acquiring PartnerRe for $130 a share, or about $6.4 billion. All figures are in United States dollars. In addition to about 44% of voting shares of Fiat-Chrysler, Turin-based EXOR also owns a significant minority of powertrain and heavy equipment maker CNH Industrial N.V. and the majority of real estate firm Cushman-Wakefield (which EXOR has agreed to sell).

Since April, EXOR has increased its offer to buy PartnerRe to $137.50 a share. PartnerRe and Axis Capital then amended their proposal such that PartnerRe shareholders would receive a special dividend of $11.50 a share – in addition to shares in a merged firm – if it were to merge with Axis Capital.

Related: PartnerRe asking shareholders to approve merger with Axis Capital

PartnerRe stated May 20 its board was “prepared to engage in discussions” with EXOR to determine whether its new offer could “be improved.” The following day, EXOR announced it was “prepared to commence” discussions once PartnerRe’s directors declare that EXOR’s offer is “reasonably likely” to be “superior” to the proposal to merge with Axis. But on May 22, PartnerRe countered that “by demanding that we declare their offer ‘reasonably likely to be a superior proposal’ as a precondition to any negotiations, EXOR has effectively rejected” PartnerRe’s offer to engage in discussions.

EXOR announced June 3 it filed a “definitive proxy statement” with the U.S. Securities and Exchange Commission States “in opposition” to the proposed merger with Axis.

Related: PartnerRe board to review revised takeover offer from EXOR

“This enables EXOR to communicate directly” with PartnerRe shareholders, EXOR said in a release.

PartnerRe and Axis Capital were 10th and 15th respectively – by non-life gross written reinsurance premiums in 2013 – by A.M. Best Company Inc. last year. Their combined 2013 non-life reinsurance GWP was $6.728 billion, compared to $6.675 billion for Paris-based SCOR SE. SCOR ranked fifth, behind Munich Re, Swiss Re, Hannover Re and the Lloyd’s market.

PartnerRe stated June 1 its proposal to merge with Axis Capital “makes strategic sense in an evolving industry environment characterized by continued consolidation and new forms of reinsurance and insurance capital which creates opportunities to better withstand cyclical volatility.”

Related: PartnerRe board of directors rejects takeover offer from EXOR

EXOR stated June 3 that if it were to acquire PartnerRe, the firm would have an “opportunity” to grow “as a standalone, leading, pure-play reinsurer, without the pressures of being a public company.”

If owned by EXOR, PartnerRe would “remain an independent company, conservatively operated by its current, outstanding management team,” EXOR added.

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